Monetary Policy and the Adjustment of Chartered Bank Assets

Dingle, J. F.; Sparks, Gordon R.; Walker, Matthew

doi:10.2307/134015

Cited by 11 publications

(6 citation statements)

References 3 publications

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“…Detailed descriptions of the way in which cash setting by the Bank of Canada affects the excess reserves of the chartered banks and thus influences short-term interest rates in Canada can be found in Dingle, Sparks and Walker (1972) and White and Poloz (1980). The model underlying these descriptions can be characterized as a disequilibrium model and hence does not fall into the same category as the equilibrium models discussed in this paper.…”

Section: The Canadian Institutional Structurementioning

confidence: 99%

Some Theoretical Aspects of Base Control

Freedman

1981

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This paper focuses on the implications of using the monetary base or bank reserves as an instrument to control a monetary aggregate. Following analysis of a series of theoretical models of increasing complexity, it is concluded that in a system with either institutional or structural lags base control may entail very sharp and possibly undamped oscillations of short-term interest rates. The shorter the time period over which the authorities choose to bring the monetary aggregate back to its target, the more volatile will be the movements of interest rates. Furthermore, there is an asymmetry in the U.S. institutional structure such that rigid implementation of the base control system will under certain circumstances lead to a decline in short-term interest rates to very low levels. The final section of the paper is devoted to the examination of the Canadian institutional structure emphasizing the differences between the U.S. and Canadian systems.

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Section: The Canadian Institutional Structurementioning

confidence: 99%

Some Theoretical Aspects of Base Control

Freedman

1981

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“…Canada instituted a lagged reserve accounting system about the same time. See Dingle, Sparks, and Walker (1972) and White (1976) for informative discussions of how this has worked in Canada.…”

Section: Economic Inquirymentioning

confidence: 99%

“…See Dingle, Sparks, and Walker (1972) and White (1976) for informative discussions of how this has worked in Canada. This lagged reserve accounting replaced the previous system where required reserves had been a function of contemporaneous deposit levels.…”

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confidence: 99%

The Demand for Excess Reserves, Liability Management, and the Money Supply Process

Kaufman

Lombfia

1980

Economic Inquiry

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Commercial bank behavior is not adequately dealt with in existing macro models of the financial sector. The central role of a demand for excess reserves (or free reserves) function in models of the money supply process is particularly suspect. In this paper, i t is argued that changes in commercial bank behavior induced by alterations in economic and financial conditions and various banking regulations, along with the central bank's approach to policy, have combined to alter the excess reserve function and the relationship between bank reserves and the money supply. Empirical work presented suggests that the "'demand" for excess reserves has indeed undergone structural change. Thus, the study indicates that conventional approaches to commercial bank behavior and the demand for excess reserves need to be reworked.Regulations affecting commercial banks, the strategy of monetary policy, and commercial bank behavior have all changed significantly in recent years. Despite these transformations, little change is discernible in the paradigm employed in describing the linkages among the Federal Reserve, banks, and the public. The focus of the present paper is on one key part of the chain that links the above actorsthe demand for excess reservessince this behavioral relationship is the core of the money supply process described in models of the financial sector. The line of inquiry to be pursued in this paper concerns the effect of the above mentioned changes on the excess reserve relationship and thus the existing paradigm used to describe and analyze the money supply process.

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“…Statistical data on the contribution that each bank makes to the sale of Canada Savings Bonds (a nonmarketable instrument redeemable on demand) are unfortunately not available. It was found in [9] that the incidence of new issues of marketable securities was powerful in explaining the amount of total federal deposits allocated to the chartered banking system. However, no data are available on the absorption of new issues by particular banks.…”

Section: The Federal Allocation Of Depositsmentioning

confidence: 99%

The Allocation of Government Deposits Among Private Banks: The Canadian Case

Acheson¹

1977

Journal of Money, Credit and Banking

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Monetary Policy and the Adjustment of Chartered Bank Assets

Cited by 11 publications

References 3 publications

Some Theoretical Aspects of Base Control

Some Theoretical Aspects of Base Control

The Demand for Excess Reserves, Liability Management, and the Money Supply Process

The Allocation of Government Deposits Among Private Banks: The Canadian Case

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